Taking
AIM at the bottom lineKellogg's
Accounting and Information Management Department is changing
the way students--and the business world--think about accounting

by
Rebecca Lindell

Every day
around noon, most of Kellogg's Accounting and Information
Management Department gathers for lunch, dining on Kafé Kellogg
fare and each other's ideas.

Often
they talk about their research. Sometimes they talk about
the Chicago White Sox. And sometimes they talk about the numbers
behind the news -- say, the income-tax disclosures by IBM,
or the curious accounting by the latest dot-com failure.

"I
look forward to these lunches, because these are very smart
people," says Lawrence Revsine, the John and Norma Darling
Distinguished Professor of Financial Accounting. "I learn
something new every time. I think it's an interesting sign
about how we feel about each other -- that we spend this sort
of time together and like to listen to each other's ideas."

These
"numbers people" enjoy each other's company. A lot.
In addition to sharing the noontime hour, they regularly team
up for teaching and research projects. The camaraderie creates
a synergy that, department members say, has produced some
of the most innovative thinking on accounting anywhere.

"No
matter what we do, we're all doing some progressive thing
to reach the next frontier of scholarly thinking," says
Bala Balachandran, the J.L. Kellogg Distinguished Professor
of Accounting Information and Management and Decision Sciences.
"Though we're a small department, our impact is large."

"This
is a world-class department -- one of Kellogg's best-kept
secrets," Revsine says of the accounting group. "We
don't simply put together things that exist somewhere else.
We've created courses on topics like mergers and acquisitions
and financial analysis that other schools have only adopted
within the last several years. What we do is exciting stuff."

Among
the signature courses is the department's most popular elective,
Financial Reporting and Analysis. The class attracts more
than 500 students each year, and is taught by Revsine, Assistant
Professor Elizabeth Keating, and department chair Robert Magee,
the Keith I. DeLashmutt Distinguished Professor of Accounting
Information and Management. Its textbook, also authored by
Revsine, is used by about 150 accounting programs around the
world.The course "is not about mindlessly downloading
financial statements and cranking numbers, but understanding
the motivations managers have to manipulate those numbers,"
Keating says. "We try to get into the shoes of people
who will be looking at financial statements and show them
where the pitfalls are. This was not being done before."

Other
courses take an interdisciplinary approach to accounting,
examining how organization-behavior principles affect what
gets put into financial statements, or how accounting issues
play into marketing decisions. "It's just as important
to understand these issues for internal decision making,"
says Associate Professor Beverly Walther.

"We
don't have any axes to grind or territory to protect,"
Balachandran explains. "We encourage cross-fertilization."

Many of
Kellogg's accounting professors, in fact, arrived at the department
after stints in other areas. Balachandran, a former professor
in managerial economics, took a leave of absence from Kellogg
and worked for Arthur Andersen before rejoining the school.
Associate Professor Linda Vincent worked at Booz€Allen and
then became an investment manager before embarking on her
academic career. This sort of cross-training has resulted
in the firm belief, shared department-wide, that to solve
accounting problems, one must be creative.

"When
the numbers don't add up, you have to be imaginative to determine
what sort of transactions might have been engaged in to put
those financial statements together," says Magee.

The Kellogg
accounting team has received kudos from many quarters.
Many faculty members serve on the editorial boards of prominent
academic journals. Magee was editor of The Accounting Review
for three years. Thomas Lys, the Gary A. Rosenberg Professor
of Real Estate Management, is an editor of another leading
research journal -- the Journal of Accounting & Economics.
Balachandran is editor of Management Science, a top journal
that spans academic disciplines in its coverage of management
issues.

They are
also setting the direction for the field. Ronald Dye, the
Leonard Spacek Professor of Accounting Information and Management,
is current vice president of research for the American Accounting
Association. This group bestows the annual Outstanding Accounting
Educator award to an academic whose research and teaching
have profoundly advanced accounting. Two Kellogg faculty members
-- Revsine in 1992 and Magee in 1999 -- have received this
prestigious award, putting Kellogg in rarified company with
only four other schools with multiple winners on the current
faculty.

"I
think that says a great deal about the quality of this department,"
observes Dye.

It's a
reputation nearly a century in the making. The first chairman
of the Northwestern Accounting Department was Arthur Andersen,
the founder of the firm that bears his name. Eric Kohler,
who twice served as president of the American Accounting Association
and later became controller of the Tennessee Valley Authority,
also was one of the department's early members.

"Back
in the 1910s and '20s, this was a prominent department, but
not in a traditional sort of way," Revsine says. "It
was made up of influential people who wrote classic textbooks,
formed international accounting firms and held important positions
in government. They weren't just academics; they were shaping
the business environment in the world at large."

Today,
it's clear that the department continues that tradition through
its research, teaching and professional service.